Cross-border shopping, Tax differences, H31, H32, H73, E62,

No abstract

The aim of this paper is to evaluate the long‐term impact on Spanish individual income tax (IRPF) compliance of the amnesty measures granted in 1991 within the framework of the 1988–91 income tax reform programme. To that end, we combine time‐series techniques with outlier detection methods and the Bai and Perron (1998) test for the endogenous estimation of structural breaks. On the basis of the analysis of the monthly IRPF tax collection series from 1979 to 1998, we find that the amnesty had no effect on tax collection in either the short or the long term. By contrast, we find evidence of the permanent positive impact caused by the legislative and administrative measures linked to the IRPF reform process begun in 1988.

In this paper the authors analyze the existence of profit shifting between Spain and other OECD and EU countries. Using a sample of 1,169 Spanish subsidiaries owned by foreign OECD and EU parent companies and a sample of 317 EU subsidiaries owned by Spanish parent companies, taken from the AMADEUS Database for the period 2005 to 2014, and a simple tax rate difference as a measure of the tax incentive, the authors obtain a negative effect of corporate income taxes on reported profits. When the tax rate differences between Spain and the foreign countries vary by one percentage point, reported profits vary by approximately 2.7 to 3%. This is consistent with profit shifting activity by corporations and matches the empirical results in the literature. Furthermore, the authors calculate the impact of this activity on Spain's tax revenues from the sample of Spanish subsidiary companies. They obtain that the tax revenues vary from year to year, depending on the level of taxation of the main investor countries in Spain in comparison to the Spanish tax rate. IntroductionAmong multinational enterprises (MNEs), profit shifting (PS) is a tax planning strategy within a group consisting of artificially shifting taxable income from entities located in high tax paying countries (basically, countries with high corporate income tax, CIT) to entities located in countries with lower tax rates. The PS phenomenon, like other tax avoidance and evasion devices, causes what is known as Double Non-Taxation, which refers to the minimisation and sometimes zero taxation of certain taxable income (or more generally, taxable object). Where there is PS activity, worldwide CIT revenues become lower because profits are taxed at low tax rates.Nowadays these tax minimizing activities are encouraged by the discrepancy between the features of today's economy and the international taxation standards (based on the Separate Accounting Method) created a century ago, when international exchanges of goods and services were limited and business models were simpler. While the world economy is becoming ever more globalized, current international taxation standards require MNEs to report profits separately in the different jurisdictions in which they operate. This creates an opportunity for MNEs to develop strategies to reduce their tax burden, most of which are legally acceptable, because it is difficult to determine where profits are created. 1 The digitalization of the economy, the complexity of business models and the diversity of tax rules in different jurisdictions (which creates tax loopholes) also make it easier for companies to develop these strategies.Two of the most popular PS mechanisms among MNEs are transfer pricing and thin capitalisation. Transfer prices are the prices that entities set when they exchange services and/or goods within the multinational group, i.e. the prices applicable to related-party transactions, which have to be determined as if the transactions were between independent enterprises, i.e., according to the arm's len...

Probit/logit techniques are applied to the data from Barometer No. 2,829 published by the Centro de Investigaciones Sociológicas to examine three problems related with public sector decentralisation. The paper concludes, first, that citizens' perception of efficiency gains from decentralisation have a positive effect on their support for decentralised government. Second, that citizens are more likely to perceive the efficiency gains from decentralisation if they correctly ascribe responsibility for education and health services to regions. And third, that citizens who most accurately identify regional responsibility for the provision of those services tend to be better educated, older, engaged in paid work or public employment, concerned about regional politics and resident in one region with higher initial level of devolved powers.

Abstract:The aim of this paper is to identify the variables affecting the decision to make contributions to personal pension plans and the amount of such contributions. For this purpose, we specify and estimate a Tobit model for a sample based on the 1995 Personal Income Taxpayers Panel prepared by the Institute of Fiscal Studies (Spanish Ministry of Economy and Finance) formed by 3,041 taxpayers, of whom 358 made contributions to pension plans. Our results suggest that individuals decide to invest in pension plans on complex grounds combining the wish to benefit from tax savings and to ensure they will receive supplementary income upon retirement.

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The purpose of this paper is to evaluate the efficiency cost of transfers. To this end, we develop a model of individual demand decisions about the provision of a regional public good that encompasses a continuum of tax-transfer scenarios to finance regional public expenditure. We assume that individuals have identical quasilinear preferences defined over private consumption and the regional public good, that endowment income varies between individuals and regions, and that regions have different predetermined sizes. In an economy-wide resource constrained framework we show that, despite its simplicity, this model is capable of discriminating the efficiency properties of the different scenarios considered, and that the substitution of matching transfers for own-regional taxes always raises the provision of the regional public good, despite the resource-constrained nature of the exercise. The model allows very easily the analysis of equalising transfers, which we show to be distorting only when a matching element is present. We also find that, when transfers have a matching element, 'fiscal illusion' increases the elasticity of public good provision with respect to transfers, and suggest a potentially refutable hypothesis to identify the existence of this phenomenon.